Abstract: With the advances of mobile Internet market, many customers use smartphones and tablets to replace desktops as the default Internet accessing tools. The demand for mobile data also increases rapidly. Despite the increasing popularity of mobile computing, exploiting its full potential is still difficult due to the expensive Internet access from mobile clients. The conflict of demand-cost has impeded the development of mobile Internet in some extent. It has become a critical issue that how to design the optimal data allocation mechanism for all participants from the global perspective. In this paper, we investigate a novel data allowance (DA) model which enables seamless collaboration between Internet content providers (CPs) and Internet service providers (ISPs). Taking Alibaba’s real-world deployment as an example, we provide a detailed economic analysis of this business model and reveal the following findings: Firstly, this model enables a more flexible relationship between ISPs and their customers, which can efficiently increase the active online time of mobile users. Secondly, the proposed CP-provided subsidization policy leads to a win-win solution for both CPs and users. Thirdly, the subsidization policy is restrained by some constraints which ensure the validity of the subsidizing process. We believe that our findings provide important insights for CPs and ISPs to design the effective subsidization mechanism for mobile users in the mobile Internet market.

Key words: mobile Internet, network economics, mobile data, subsidization mechanism, game theory